I bought a bread recently, which cost $ 10.

I bought a bread recently, which cost $ 10.

Chapter 2

1. I bought a bread recently, which cost $ 10.
2. If I were to make the bread at home, it would take me time to learn how to bake, mix ingredients, and oven time. It would take approximately four hours.
3. Earning $10, I need to work for less than one hour.
4. Buying bread instead of making it at home was a rational decision because giving up less than an hour to make $10 is more sensible as compared to giving up four hours to bake the bread at home.

Chapter 3

I have observed the price of corn is lowers from July to December as compared to other months of the year. The primary reason for these changes in price is because corn is harvested in early July through early December. Therefore, corn supply is high at this period, and demand is also high because people buy more to stock for future use, during corn harvest both demand and supply for corn increase. Corn price falls because supply might be higher than the demand.

Chapter 4A

Item 1: last year, I bought a shoe from the H&M retail store at $85. I spared $100 to spend on new shoes because that is how much I get from the shoes. Therefore, my consumer surplus is $15.

Item 2: I recently ordered a drawing tablet for $60. The highest amount of cash I was willing to pay for the drawing tablet was $75, which was the amount to pay for the next best alternative. My consumer surplus was $15.

Item 3: I bought a pack of apples in the past few days at $40. The apples were very attractive, and I was willing to pay up to $50 for the pack. After paying $40, my consumer surplus was $10.

Chapter 4B

So far, so good. I find the course progressing very well for me. I scored average on the last quiz, but I have been working on a study plan to improve my grades for the next evaluation. Reading extra has been very beneficial to me, and I hope to try the strategy in every other area in my studies.

Chapter 8, 9 & 10

Such data is best presented in table format.

Year

GDP Growth Rate

Unemployment Rate

2007

2008

2009

2010

2011

Chapter 10B

The course progress is excellent, and I am striving hard to improve my grades. This class has been very beneficial, and I get a lot from it. I am in a position to understand world economics better while I look forward to the rest of the course.

Chapter 11

1. There are many machines that I use in my daily life. One I find significant is the washing machine.
2. The washing machine saves me a lot of washing time. Without it would take me up to more than a half-day to clean my clothes. It saves me time to work on other essential things, such as working and earning money for my needs.
3. Given another chance, I will purchase a bread maker. It will help me in food preparation and also save time spent in the kitchen. With the bread maker, I would experience diminishing returns because bread preparation has not been such a time-consuming task, only that the machine will make it quicker.

Chapter 12

1. Most of us were not directly affected by the recession in 2008 since we were children. I do not remember any changes in my family’s spending habits; although I hear from my parents, those were difficult times when we had to depend on the little they earned. My parents had to cut on the budget and buy what they could afford.
2. Due to the recession, most people realized the importance of saving for difficult times. More savings automatically reduce the amount of money used on consumption. With a 70% economic activity depending on consumer purchases, an increase in savings lowers the aggregate expenditure.

Chapter 14

1. If a bank I am using experience bank run, I would join the run and not trust that the FDIC would provide insurance to my account.
2. Even worse, in a European bank with no insurance, I would be very fast in withdrawing my cash from that account. It is just wrong to not secure depositor’s money.
3. Assuming a am an investor who has saved a lot of money with a European bank, bank panic would be even worse for me. I would opt to save my money in a box at my house.

Chapter 15

1. I choose an economy at recession
2. In this case, it will be essential to use expansionary policy.
3. Using the policy, it will increase the level of aggregate demand either by an increase in government spending or a reduction in tax rates.
4. I would choose to raise the reserve requirement as well as the discount rate. Additionally, I would sell bonds to the open market operation.
5. By increasing reserve requirements, banks will have less to lend customers, which means a decline in money in circulation. On the other hand, buying bonds from the open market operation will increase the amount of cash in circulation whereby people will have more money to spend.